Microsoft is cutting 7,800 jobs, according to a memo from Satya Nadella to employees.
As a result of Wednesday’s layoffs, Microsoft will incur an impairment charge of $US7.6 billion this quarter related to its Nokia acquisition.
In 2014, Microsoft bought Nokia’s struggling smartphone business for $US7.9 billion. Since then, Microsoft has tried to restructure it.
Industry sources speculated on rumours of a write-off as early as this spring. Microsoft’s quarterly earnings statement revealed that the company’s phone-hardware division had spent so much money on sales of Windows Phone hardware that it lost about $US0.12 per device sold. In other words, Microsoft spent $US1.8 billion to sell $US1.4 billion of phones.
Nadella says job cuts will take place mostly in Microsoft’s hardware division, including its smartphone business.
Job cuts will take place over the next few months, Nadella said in his memo.
The new job cuts are in addition to the 18,000 jobs — or 14% of the company’s workforce — that Microsoft said it was planning to cut last year, one of the biggest layoffs in tech history.
“We are moving from a strategy to grow a standalone phone business to a strategy to grow and create a vibrant Windows ecosystem including our first-party device family,” Nadella said in his memo. “In the near-term, we’ll run a more effective and focused phone portfolio while retaining capability for long-term reinvention in mobility.”
Nadella’s memo reiterated the sale of part of its mapping technology and imagery acquisition operations to Uber, which TechCrunch initially reported last week. Nadella’s memo also mentioned Microsoft’s partnership with AOL and AppNexus for display advertising.